Wal-Mart Archives

Toyjobs Continued Its Hot Hand

After a weak first quarter, Toyjobs followed up April, its best month ever, with a strong May showing. This mirrors the economy as a whole which, during the last couple of years, has had a series of weak first quarters following by markedly increased (although still tepid) growth. The latest projections from the Federal Reserve Bank of Atlanta are for second quarter GDP growth of 2.5%. Overall, it should come as no surprise that the toy industry has been hiring, even though some companies have experienced a bit of a Star Wars hangover. NPD has reported that toy sales in the US increased 6.5 % in 2015 and another 6% in the first quarter of 2016.

Moving forward economic signals appear to be mixed. US credit and debt balances have been soaring as consumers grow more comfortable carrying debt and spending money.

Pending home sales rose in April to the highest level in over ten years. April also saw consumer spending rise after a six-month slump. Wal-Mart rocked to a strong quarter even while many other retailers struggled.

On the other hand, the US has suffered two weak job reports in a row with the May report being particularly devastating. In May, employers added only 38,000 jobs – the fewest in almost six years.

Revisions to prior reports also subtracted a total of 59,000 jobs from payrolls in the previous two months. Add to that the numbers of Americans working part-time jobs who want full-time jobs shot up from 6 million to 6.4 million. These “involuntary part-timers” continue to be a sign of considerable weakness in the job market. Finally, although the headline unemployment rate dropped to 4.7% this was largely due to a steep decline in labor force participation as millions of people have left the workforce in frustration.

The future is murky. Two bad months do not make a trend, but they may be a sign that the economy is losing what momentum it did have. On the other hand, maybe this is just the annual summer doldrums beginning a couple of weeks early. In any case, this is not the time to load up on debt or go out and buy a new Ferrari. Uncertainty calls for caution.

Here at Toyjobs, we are cautious but also quite optimistic. Over the last fifteen months, toy sales have been much stronger than the economy as a whole. I have no doubt that in six to eight weeks, toy companies will realize that the 2017 toy selling season is coming up fast and will begin the annual mad scramble for new or additional Sales Executives. Be advised that the Dallas “October” Fall Toy Preview arrives a little early this year on September 27th. It would be prudent to start your sales searches in late July or early August if you want your new people on board and ready to go.

All the best,
Tom Keoughan

By ToyJobs|2020-11-20T08:51:00-06:00June 8th, 2016|ToyJobs Blog|Comments Off

Looking at Holiday Sales with Blurry Vision

Rosy forecasts but weak real world numbers make for uncertainty

Retail Projections

Early forecasts for Holiday Spending 2015 have been quite optimistic. Households have been enjoying fatter wallets, thanks to lower gasoline prices and cheaper imports, thanks to a stronger dollar. Retail sales reflected this by growing from January to July. NPD has reported that toy sales were up 6.5% in the first half and is projecting 6.2% growth for the year as a whole. The National Retail Federation is forecasting a holiday sales increase of 3.7%. That sounds good but less so when you consider last year’s 4.1% gain.

Retail Reality

Forecasts are fun and they can be helpful, but let’s not ignore what’s going on in the real world. A retail sales slowdown began in August and the Commerce Department recently revised the growth rate down to 0.0% for the month. September retail sales numbers were not perceptibly better with only a 0.1% growth rate. While low gas prices have been increasing disposable income and the strong dollar has led to some price deflation, consumers have been channeling additional spending toward services such as vacations and restaurant meals. Before we get pessimistic, let’s keep in mind that for economic data, some months counts less than others. August is rarely a good indicator – it’s summer! And September can often be a transitional month, especially when Labor Day arrives late, as it did this year.

Weak Jobs Reports

Concurrent to the slow-down in the retail sales is what we’re seeing in the job market. While job creation was strong in the first six months of the year, in September there were only 142,000 net new jobs. The numbers for July and August were also revised downward so that the third quarter monthly average for net new jobs was 167,000. That’s down from a monthly average of 198,000 for all of 2015 so far, which is down from 260,000 a month in 2014. While we should be concerned, again let’s not get overly pessimistic quite yet. Third quarter job gains have a historical tendency to run below average for the year and the deceleration often turns out to be temporary, rebounding in the October to December quarter. Again – it’s summer! …I’m going to wait for the October numbers before I really try to figure out what’s going on.

Wallowing Wal-Mart

The big news last week was Wal-Mart. The retail behemoth said that, while sales would be flat, earnings could fall as much as 12% next year. The lower margins will be the result of “investments” in staffing at US stores and actual investments in ecommerce. When Wal-Mart experiences margin pressure – “Let the vendor beware!” – that can only mean bad news for its suppliers. Already they are asking all suppliers to pay fees to keep inventory in Wal-Mart warehouses and in some cases, they are strong arming vendors into accepting extended payment terms. One can only imagine that there will be more of this type of thing to come.

Strategically, changes needed to be made. Wal-Mart was falling behind in the retail wars. It’s difficult to compete with a company like Amazon, which is apparently comfortable not making any money for more than twenty years. From a timing standpoint, this makes perfect sense. New CEO Doug McMillon is a lifer who enjoys broad support. He is relatively young and will probably be in the CEO chair for another 10-15 years. He will be able to chart the new lows as his starting point as he goes about setting new strategy and rebuilding the retail juggernaut. He certainly has the time and resources to turn things around, but he has to get the strategy right. Not that he’ll notice, but we at Toyjobs wish him the best of luck.

Putting together a strategy to right the Wal-Mart ship is way above my pay grade, but I do have just one little question – we hear a lot about a “seamless customer strategy” and “click and collect” where a consumer can buy online and then stop by a store to pick up their purchases. My question is – why would I want to do that?? When I can simply purchase online and have my items delivered to my door. Just sayin’.

Dallas Fall Toy Preview

I found most people at the Dallas Fall Toy Preview to be very optimistic. The Frozen phenomenon seems to be fading fast butShopkins has been and Star Wars soon will be taking the world by storm. Wicked Cool had a very strong looking product line and over at the Auldey RC booth, people were busting through the doors.

Certainly there were the usual complaints – “Why are we here?” and “This place is empty.” But, when I asked manufacturers if their dance cards were full, they almost unanimously answered “yes.” In fact, in a completely new trend, instead of ambling in late, buyers were arriving for appointments early – even a day early. It seems that everyone wanted to get out of town as quickly as possible. I’m guessing that Thursday was completely dead, but can’t really tell you because I had already left for Austin to enjoy a much deserved long weekend of good food and good music.

October continues to be a crazy time in the toy industry with buyers and manufacturers pinballing between Dallas, LA, and Hong Kong at an accelerating rate and with even more disjointed schedules than ever. I know more than a few execs that will be in all three locations (simultaneously?) this month. The TIA still needs to figure this out. Things are getting messier, not better.

Navigating Conflicting Signals

What do we make of all of this conflicting noise? Should we try to make sense of things or just bury our heads in the sand? I feellike I’m crossing a deep river barefoot and just feeling around for smooth stones with my feet. Not that anyone listens to me but I am going to acknowledge, but not put much faith in, all of the conflictingsignals until I see the October numbers. Historically, October is a solid bellwether month. I’m optimistic but am going to be conservative in planning and spending until things actually happen. I think that there’s going to be an absolute ton of Star Wars merchandise sold but I also think there will be an awful lot of it left on the shelves. What then? “Curb Your Enthusiasm” and don’t become “Irrationally Exuberant.” It’s likely to be a strong holiday shopping season, but at this point that is far from certain. Be prepared for the aftermath. I am filled with both optimism and uncertainty and I’d prefer to be surprised on the upside.

May the force be with us,
Tom Keoughan

By ToyJobs|2020-11-20T08:51:00-06:00October 21st, 2015|ToyJobs Blog|Comments Off

Another Black Friday Disgrace – While Toy Hiring Soars!

Another year – another national disgrace as the human herds were once again rampaging through the nation’s retail outlets in what is little more than legalized wilding. While spreading out the bait over several days made the peak frenzy a little less intense, it also means that we now have four consecutive days of mayhem.

As usual, we had human (?) stampedes, knockdown merch, brawls, aggressively unnecessary pepper-sprayings, shotgun battles over parking spots, a guy stabbed while carrying home his new big screen TV, police officers being dragged by cars through parking lots, and a new low: kids having a stun gun fight in a Philadelphia mall.

Thank you Wal-Mart, Thank you Target, Thank you Best Buy, Thank you Kohl’s for inciting this dehumanizing behavior. If I or a member my family was foolish enough to venture out into these deal hunting scrums and became injured; you can be sure that I’d be having a phalanx of the most rabid attorneys around suing you for intentional reckless endangerment. I’m sure we could find a slew of other legal misdeeds as well (BLACK FRIDAY DEATH COUNT)

More people were out participating in the melee than ever before, but on average, people spent less than last year ($407 vs. $423). Maybe retailers’ promotional activity pulled forward some holiday purchases earlier into November. Maybe, with smart phones at the ready, consumers are better able to make price comparisons and sniff out the best Black Friday deals. What does appear clear is that retailers have cut costs so much that it will negatively affect their margins and those of its suppliers (Wait? That’s us!).

In the meantime, toy industry hiring has soared. As reported here last time out, search starts rocketed in early October as children’s products started hitting the retailers’ shelves. Toy companies have been filling those jobs at a feverish clip which continues to this day. The pace will likely be maintained through year end. On January 2nd, the toy industry, as a whole, will board the planes for their annual pilgrimage to Hong Kong. This time out, a whole lot of business cards will be wearing fresh, wet ink.

The surge in hiring appears to be mirrored in the economy at large. Payrolls increased by a seasonally adjusted 203,000 in November. Earlier months have been revised upward and the job increases have now averaged 193,000 for the past three months.

That is nearly enough to impact the unemployment rate in a meaningful way. The jobs recovery has had false starts before, but this time it seems much more solid and sustainable.

Other economic data seem to support an improving outlook. Third quarter economic growth has been revised sharply higher to 3.6%. US consumer spending is up 2.1% from a year ago. Wages are up a modest 0.2% Consumer Confidence is on the rise and The Federal Reserve reported that credit card debt has risen to the highest amount in three years. All of those are hopeful signs that shoppers will be out buying more toys, Xboxes, and iPhones in the coming weeks.

I would like to see a few more months of improving economic data before declaring that the train has left the station, but it does appear that we are finally, finally gathering momentum. Remember folks, you heard it here first – all the way back in October…now if Washington can just stay out of the way.

It is my fervent holiday wish for the coming year that the economy continues to gather strength in a sustainable way and that there are more and more jobs for people who don’t have them and want them, especially the long term unemployed. God bless us, everyone!

All the best,
Tom Keoughan

By ToyJobs|2020-11-20T08:51:01-06:00December 11th, 2013|ToyJobs Blog|Comments Off

Economy and Employment Continue Gradual Improvement

U.S. consumers continued to increase spending in July as the economy continued to grind out a slow but steady expansion. The Commerce Department last week announced that retail sales for July climbed a seasonally adjusted 0.2%. They also adjusted the June growth rate upward from 0.4% to 0.6%.

People are seeing the value of their homes and retirement accounts rise, which has begun to create a “wealth effect.” Also, Americans have spent the last few years struggling to shed debt. Total consumer debt is now 12% lower that at its peak in the fall (just before “the fall”) of 2008. Lending and spending are on the rise, especially for the big ticket items like homes, cars, furniture, and my favorite – barbecue grills.

Consumer confidence is increasing and is at its highest level in years, which economists attribute to the gradually improving employment picture. Toyjobs concurs that, at least in the children’s product business, hiring has increased dramatically. On the jobs front, things seemed to turn the corner in 2012 after three dismal years. In 2013, hiring has been much more robust. Even the annual summer doldrums period has seen more hiring than in any of the last five years.

[See Toyjobs Success Stories)

That said, there is a puzzling disconnect behind the rise in overall consumer spending and the weak recent showing of many retailers. Wal-Mart, Kohl’s, Nordstrom’s, and Macy’s last week, posted poor second quarter results and cut their profit forecasts for the year. Aeropostale, American Eagle Outfitters, and Abercrombie & Fitch also lowered their sales and profit outlook.

Part of the problem may be that spending for cars, houses, and home improvement may have eaten up dollars that would have been spent on clothing, accessories, and general merchandise. The hope is that once this pent-up demand is sated that spending will trickle down to retail more broadly. After all, one can only buy so many cars and washing machines before you have all you can use.

Holiday spending, in the aggregate, can be looked at as one big ticket item which bodes well for toy manufacturers. However, consumers will likely chase sales and hunt for value, thereby causing margin pressure on retailers. The question is will retailers eat those margin hits or will they beat it out of their suppliers in small Bentonville rooms.

On the “good news” side of the ledger, Toys’R’Us, which has been reeling as of late, has announced that it plans to add 100 stores internationally by the end of the year. There will be 19 new or reconfigured stores in the US and a total of 51 stores in China by year end. This is good news for two reasons. First, there will be more shelf space to fill which should translate into more goods sold in to the retailer. Also, it appears that ownership of the private entity is investing for growth rather than backing off after recent poor results. We wish them all the best as a strong Toys’R’Us makes the toy industry stronger.

All told, the economy is slowly gaining ground and increasing momentum like a train leaving the station. That said, we should not forget that we currently live in a bifurcated society. Most people have jobs and, for them, things are slowly getting better. However, U6 (the number of people either unemployed or having to accept only part time jobs) is still at 14%. So while 86% of us are doing alright, at least 14% are still struggling.

Fortunately, increased consumer spending on big ticket items should start to trickle down to improve retail sales as a whole. As this couples with increased consumer and business confidence, it should lead to a much better employment picture. This is already beginning to happen. We should all hope that as the train chugs out of the station and begins to pick up speed that the long term unemployed and the under employed will be able to climb aboard. As employers, we should try to haul them aboard when we can.

See ya’ll in Dallas,
Tom Keoughan

PS – Dallas Alert! Dallas Alert! If you want to upgrade your sales team for the 2014 sales season, you better get cracking. You should have started two weeks ago!

By ToyJobs|2020-11-20T08:51:01-06:00August 20th, 2013|ToyJobs Blog|Comments Off

Brief Rain Delay – Waiting for Takeoff

While the headlines blared “Retailers’ Holiday Sales Disappoint” this was based on same store sales which were up but not as much as anticipated. Those projections seemed to be based on mostly wishing. However, same store sales is a retail metric meant to measure a retailer’s health. If you “make stuff” that you sell through retailers, a more meaningful metric is total sales, which measures all the “stuff” sold in all of a retailers’ stores. If a retailer builds more stores and in total sells more “stuff” as “stuffmakers” it’s not our primary concern that the retailer didn’t sell quite as much as they wanted in each store. We want to know how much “total stuff” of ours they sold.

Same stores Sales increased by 4.5% according to Thomson Reuters but this was skewed upward due to Costco being the most heavily weighted company in their index and Costco knocked it out of the park. Same store sales minus Costco increased 2.8%. Those aren’t break out the champagne numbers, but they’re not too shabby. Total Sales should be up by more. Unfortunately, the best chart I could find only runs through November 2012. New data will be available on February 13 (Click Here For Chart). We will also publish the new chart new chart next month.

The holiday sales season was characterized by heavy online shopping in November and early December followed by strong bricks and mortar purchases at discounted prices during the two weeks leading up to Christmas. Toy sales followed this pattern and were flattish overall with a weak November and strong late December.

Why is this man smiling?

Leapfrog was a huge winner with four of the top ten toys of 2012. Costco, Kohl’s and Macy’s did very well on the retail side. Amazon sales were quite strong but, as always, profitability is suspect. Times were tough for Hasbro who experienced weak holiday results and is planning to cut 10% of its workforce. Toys ‘R’ Us posted poor results both in the US and internationally. Sears/Kmart remained wobbly.

Both TRU and Best Buy accused Wal-Mart of posting online bait and switch ads. They claimed that the retailing giant would run internet ads claiming lower prices but then their stores would have either different models or be out of stock. Wal-Mart’s rather disingenuous response was “our ads don’t claim to compare identical products.” Wal-Mart had been accused of similar tactics back in the old print ad days of the mid-nineties. We’ll have to wait and see how this plays out.

As Toy Executives return from Hong Kong, I’m hearing that while late December toy sales were very strong that they didn’t make up for the rest of the holidays sales season. Retailer’s are carrying too much inventory which is compromising open to buy dollars and little early year restocking will be necessary. This will hurt toy company’s in the first half which has always been a difficult period for them anyway. The other thing I’m hearing is that in 2013 Teenage Mutant Ninja Turtles are going to be huge

Looking forward, we’re a long way off from Christmas 2013 but the elimination of the payroll tax cut could hurt consumer spending since in the current economy many households are living paycheck to paycheck. Europe is in recession which will impact the largest toy companies and smaller ones at the margin. That said, the economy has stabilized and continues to improve. Bipartisan shenanigans in Washington will continue to dampen economic growth during the first part of the year. That, as well as, the European situation and existing retail inventories should cause things to continue to muddle through until May or June. As we move past those headwinds, the economy should gain strength in the second half. I then see blue skies in 2014 although it’s really much too early to make a firm call.

Toy industry hiring should follow these economic trends which, for now at least, seem to match up well with the toy world’s annual business cycle. Look for companies to be cautious but to add where they have to in the first half and regain confidence and increase hiring as the year moves forward. Let’s keep our fingers crossed

Seeing lights at the end of the tunnel,
Tom Keoughan

By ToyJobs|2020-11-20T08:51:01-06:00January 28th, 2013|ToyJobs Blog|Comments Off

Another Black Friday Disgrace and Toy Industry Hiring Hits an Air Pocket

Things promised to get ugly as the annual orgy of spending by stampeding shoppers was set to coincide with a strike by Wal-Mart workers, but a number of factors came together to ameliorate what could have turned into a true national disgrace. Rather than concentrating all of their price cutting in one massive Black Friday push, retailers spread the bargains over a long super shopping week. Many stores even opened and started sales on Thanksgiving evening. Rather than door-busting human herds, consumers came sleepily staggering in like retail zombies when they should have been home, laying tryptophan sodden on the sofa, actively avoiding piles of dirty dishes.

Several retailers also had earlier starts to their layaway programs which surely eased Thanksgiving weekend traffic as well as locking in prices at earlier pre-sale levels. Online sales also had a broader time horizon as Cyber Monday grew into what could be called Cyber Two Weeks. Both online retailers and the web arms of bricks and mortar outfits have been racking up big gains. Online competition has been fierce as retailers use computer algorithms to adjust prices in real time.

While all this dampened the Black Friday frenzy, there were certainly enough wild melees, parking lot gun threats, “panty bar” cat fights and trigger happy pepper spray police to go around (Stampedes and Gun Threats During Black Friday).

Meanwhile, back on planet Earth – toy industry hiring, which has been quite strong since about April has suddenly slowed. My feeling is that this is temporary and that after negotiating this air pocket we will continue our long upward climb.

Toy industry hiring has always been very event driven with companies regularly putting off decision making on their staffing needs until the next: trade show, sales call, order confirmation, etc. Earlier in my career, I was always flabbergasted by this. “If you need a top Wal-Mart salesman, what does it matter what happens at the next golf outing?” Over time, I’ve learned not to judge and just accept reality for what it is.

Since we are in the midst of the all important holiday shopping season, it is only natural for toy companies to wait and see what happens. Many companies will also have new budgets beginning in January and three of the four most important industry trade shows take place in January and February which adds to the temporary standstill. These will pass like the pages of a calendar, but it is no surprise that toy industry hiring often slows at this time of year only to ratchet back up in March or April.

Much less certain is the outcome of the high speed chicken match going on in Washington, D.C. The brief spell of post election “happy talk” is now over. The two parties are as far apart as ever. In response, U.S. companies are scaling back hiring and investment plans at the fastest pace since 2009. Many companies have put together two 2013 budget plans for different outcomes to political negotiations over the impending fiscal cliff. Not only will going over the cliff probably throw the US (and global) economy into recession but it will be compounded by companies turning off the spending spigots.

Politicians of all stripes are up in their own heads trying to figger out which game theory scenario they like the best. Negotiate now or let it all slide over the fiscal cliff? Which helps me more? Which hurts him more? Who will get the blame? Never mind the economy or the public.

At the time of this writing there arn’t any substantial talks and the situation is in stalemate. Last week, Obama didn’t mention a “grand bargain” but rather “putting together a framework.” I think “framework” is code for “punt” and that things will be put off for six or twelve months. At that time we’ll be right back where we are now and things will once again devolve into gridlock and competitive finger-pointing. In the meantime, an economy that has been trying hard to recover continue sputtering along, once again left without enough fuel for takeoff.

Muddling through,
Tom Keoughan

P.S. – A recruiter, who we usually refer to as the Obvious Huckster in Ohio (OHiO) recently felt the need to publicly declare that he was indeed still in business. I guess nobody was quite sure. If you cross paths with him, I would suggest asking for references from five people that he has placed in jobs during the last six months. What you discover may surprise you…then again, it may not. 🙂

P.P.S – Lastly, I would like to share my condolences to all families and businesses adversely affected by the Superstorm Sandy. Personally, we took two feet of water into the first floor of our Hoboken home so I know what it feels like.

By ToyJobs|2020-11-20T08:51:01-06:00December 5th, 2012|ToyJobs Blog|Comments Off

PlayCon a Big Success – Toy Industry Adds Jobs!

In mid-May I attended my first PlayCon in Washington, DC, and I confess that I really didn’t know what to expect. I must say that I was beyond pleasantly surprised. The event was held at the Gaylord National Convention Center, a beautiful facility situated right on the Potomac. It was self-contained, easy to navigate, and within easy walking distance of several outposts of well know Manhattan restaurants.

After we were jolted awake by a combination of caffeine and an opening bagpipe ceremony, we settled in for a very meaty schedule of speakers. I’m not going to reveal here what they had to say (for that you would have to actually go) but I will give you a brief rundown of topics.

The first two speakers, Anita Frazier of NPD and Sean McGowan (who everyone already knows) provided hard data about trends in both the toy industry and some adjacent businesses. It was valuable to be able to confirm some things that you mostly knew in your gut, but more importantly some of the data was counterintuitive; especially on the hot topic of apps (it’s not just about product without inventory).

Well known children’s product consultant Tom McGrath then spoke at length about both the art and the science of license selection. Licensing can be very hit and/or miss, and Tom was very forthcoming about many of his wins and losses, why they occurred, and what he learned from them in hindsight.

Next up were Lego and Mattel. Everyone was thankful to them for opening the kimono on the why’s and how’s of their consumer research programs and I think we were equally grateful to Messrs. Wann and Barbour for refraining from revealing exactly what was under their kilts!

After lunch, Brian Torney of Kunoichi led an interesting panel about how to think about marketing in the digital world which also featured Hasbro’s Chief Visionary Steve Drucker. Steve peered into his crystal ball to prognosticate where technology might lead the children’s product business ten years in the future and beyond.

After breaking into workshop subgroups, everyone returned to see Bob Wann do a Q&A with senior Amazon executives Jon Witham and John Alteio. They discussed how to best do business with the online retail giant and also drilled down into the detail of how to optimize your product pages in order to sell more goods.

Lastly on day one, Bob Wann interviewed Neil Friedman who brings a unique perspective from spending a lifetime in the toy business including senior positions with both Mattel and Toys R Us. They talked about how manufacturers and retailers can work together more proactively and effectively. It is all about managing expectations; doing what you say you are going to do and most of all communication.

Day two kicked off with LeapFrog President (and former TRU senior executive) John Barbour speaking with TRU SVP Merchandising Richard Barry. After that we dove back again into the world of consumer research. First, with George Carey of brand strategy agency The Family Room who brought his unique perspective (backed by data, of course) on how families actually make decisions. It made perfect sense but was not at all what I thought it would be going in.

Renee Weber, VP Consumer Research for The Marketing Store, then spoke on the really big picture about some of her groups’ findings and how they have translated into the design of McDonald’s Happy Meal toys. Lastly, a lively panel on consumer research led by the very entertaining Paul Kurnit, toy advertising consultant at Kurnit Communications. (You can sign up for his RSS feed at psinsights.com)

Kudos go to Bob Wann and Shirley Price and the conference planning committee: Lourdes Arocho, Joel Berger, Mary Couzin, Richard Gill, Richard Gottlieb, Sharon Hartley, and Manuel Torres for putting together a program that was jam-packed with information. I would also like to commend all of the speakers for the spirit of sharing which prevailed throughout the entire conference. The content delivered at PlayCon was broad, deep, and thought-provoking. While everyone may know parts of this stuff, I think I can safely say that everybody in attendance was able to bring home some immediately implementable takeaways. If you weren’t there then you are just that much behind your competitors.

One thing I have learned over the last few years is that any event with Carter Kethley’s thumbprint on it is going to feature great food! At PlayCon, he did not disappoint and as always was the perfect host. Everything ran so smoothly that I realized that while the Toy Industry Association’s (TIA) Event Staff all appeared to be as serene as swans, they must have been paddling like hell underneath! Shout outs go to: Marian Bossard, Kimberly Carcone, Jackson Wong, Robyn Gibbs, and Kimberly Catucci.

PlayCon was a great place to network and meet new industry colleagues but more importantly for me a great place to solidify existing relationships away from the frenetic pace of trade shows where everyone is focused on selling – as they should be.

In other news (great segue, huh?) the U.S. had a pretty weak May jobs report. Employers added a seasonally adjusted 69,000 jobs last month and the estimates for the two previous months were adjusted downward. The unemployment rate moved up from 8.1% to 8.2%. To be completely accurate there has been some discussion that the Labor Department’s seasonal adjustment equation has been thrown out of whack. Read more here.

Factors contributing to the weak jobs report include the warm winter leading companies to hire seasonal workers earlier which boosted winter job growth while stealing from spring hiring. Additionally, renewed concerns about Europe with Greece, Spain and Italy all having trouble borrowing to finance their government spending has been unsettling. This could potentially lead to a domino effect amongst financial institutions. More importantly, the European recession will be a drag on global economic growth especially now that Asia (which has Europe as its largest customer) is now starting to slow. Lastly, there is the domestic political situation including the pending fiscal cliff which could drive the US into recession and may be causing businesses to hold off on hiring.

Anecdotally, here at Toyjobs we have seen toy companies continue to add to their staffs at a rapid clip. Toy search starts have also continued to be strong. That said, we are just about to enter the summer doldrums where for thirty years Toyjobs has seen certain regular patterns in both good economies and bad. I expect search starts to slow in the next week or two as the annual summer slowdown begins. Jobs will continue to be filled through the first three weeks of July as searches that began in May and June are completed. At that point things will be very slow until the last week or two of August when search starts begin to ramp up in response to the upcoming fall sales season. (Fall Toy Preview will be right around the corner.)

My concern is that due to either an implosion in Europe or continued brinksmanship and bipartisan idiocy in Washington, DC, employers may sit on their hands come late August and that the annual search start bounce will be muted. Most pragmatic people realize that the current tax and spending regime should be extended through 2013. We’re going to have an election in November to determine which ideological (idiot-logical?) path the country is going to take, but in the meantime let’s hope the politicians do not drive the bus off of a fiscal cliff. Since an extension is likely to be what happens anyway, let’s root for it to happen now so that businesses can plan which will hopefully lead to hiring and business investment. In the current political environment, however, I am not going to hold my breath.

Moving forward, we do have a few reasons to be optimistic. The biggest job loser in May was construction, which shed 28,000 positions. The industry lost hundreds of thousands of jobs as the residential housing market collapsed. In May, heavy construction jobs also began to be cut as the money for “stimulus/roadwork everywhere” has begun to come to an end. However, few other sectors actually cut jobs. Most simply did not hire much. One exception was the transportation and warehousing category, which added 35,000 jobs, mostly in railroads and trucking. Transportation is generally considered to be a leading indicator of economic growth. Secondly, Wal-Mart is growing again. First quarter earnings rose 10% as the retailing behemoth saw US customer traffic and average purchases rise.

So, the US economy is still growing albeit not quickly enough and faces headwinds in European and Asian economic slowdowns and a few potential landmines from Europe and Washington DC. I’m moving forward but cautiously with the feeling that if we can just avoid the landmines everything will be alright although not as good as I would like it to be.

Overdue Updates

Since the beginning of the year, I’ve been running so hard on the hamster wheel that a few things have popped up that I didn’t really have time to digest so I’ll share them with you here:

Toyjobs received a Constant Contact 2011 All Star Award for our newsletter which you are reading now. I would like to thank all of our readers for taking the time out of their busy schedules to look us over every month or so. I would also like to thank all of you who send in positive feedback after each publication.
Secondly, I have been elected to the Board of The Pinnacle Society as Treasurer. The Pinnacle Society is a group limited to 75 of the top executive recruiters in North America and I would like to thank their membership for being in excellent long-term educational asset as well as for putting their faith and trust in me.

So that’s it. Enjoy the summer slowdown. I hope you all have a chance to step off of the daily hamster wheel and spend some time relaxing and recharging your batteries for the next go round.
Moving Ahead Cautiously,

Tom Keoughan

By ToyJobs|2020-11-20T08:51:01-06:00June 19th, 2012|ToyJobs Blog|Comments Off

Toy Jobs Hiring Surge Continues

Toy jobs hiring has continued to surge as companies continue to add people because “we just can’t get the work done.” The common refrain that I hear is that retailers continue to increase the number of hoops that a manufacturer must jump through in order to get their products placed. During The Great Recession, companies cut so many people that they no longer have enough hands on deck to push all the work through in a timely fashion. Search starts continue to be strong despite last month’s flat unemployment numbers. It will be interesting to see what Friday’s jobs report looks like

A week and a half ago, I returned from The Pinnacle Society’s Spring Conference. This is a group of seventy-five of the country’s top executive recruiters and they are truly “The Big Dogs of Recruiting.” As you might imagine, the years 2008-2011 were difficult ones for the recruiting business and approximately 40% of the recruiting firms that existed in 2007 are no longer with us. In speaking with fellow Pinnacle Society members in 2011, the mood was patchy with some recruiting specialties (notably IT, insurance and accounting) returning to a semblance of normalcy while others continue to flounder. At Toyjobs, 2011 saw great improvement over the depths of 2009 and 2010, but it was still nothing to write home about. Heading to 2012’s Spring Conference, I was feeling optimistic because since the end of Hong Kong Toy Show, toy industry hiring had been soaring. At the Conference, I soon learned that hiring was back close to normal across all industry specialties. Of course, these are the country’s top executive recruiters so their numbers are likely to be stronger than the economy’s as a whole, but I see this as a strong leading indicator of more good things to come in the US employment market. Let’s all hope it continues.

Cautiously breathing easier,
Tom Keoughan

P.S. What is it with these Wal-Mart Vice Chairmen? First, we had Tom Coughlin pocketing a cool half million in gift cards for his personal use and now The New York Times alleges that Vice Chairman Edward Castro Wright was involved in a regular program of bribing local officials to facilitate the granting of leases and building permits while he was running Wal-Mart de Mexico. To date, these allegations have not been proven and we should all remember that The New York Times has a record of being a little aggressive at grabbing headlines and a little lax in their fact checking (Does anyone remember Iraqi Weapons of Mass Destruction – not to mention yellowcake). That said, many of us are aware of the sometimes strange practices one has to engage in even here in the United States just to get a permit to add screens to a porch. As a Wal-Mart shareholder, I’m upset but have to admit that I consider this a much better use of company funds than nicking three 12 gauge shotguns, a few half gallons of vodka, a large polish sausage, and a lone Celine Dion CD and hailing them back to your private compound for what must have been some sort of unholy (or at least unwholesome) secret Ozark ritual. In any case, just don’t be caught trying to give a Wal-Mart buyer a soda.

By ToyJobs|2020-11-20T08:51:01-06:00May 2nd, 2012|ToyJobs Blog|Comments Off

Economic Uptick Spurs Stampeding Human Herds

Human herds were out in force during the four day long national disgrace presided over by Wal-Mart, Best Buy and their retail brethren. The long weekend “wilding” saw shopping devolve into a full contact sport replete with tramplings, taserings, shootings, various acts of police brutality and people robbing each other in the parking lots. Unfortunately, this seems to be the real “99%”.

At a Wal-Mart in Southern California a 10PM stampede turned ugly when a woman used pepper spray to “gain an upper hand” over her fellow creatures. Over twenty people suffered minor injuries as she attempted to clear a path to the electronics section. The woman has since turned herself in but, as of this moment, Toyjobs has been unable to determine whether she was indeed an active member of the Oakland police force – another national disgrace.

In Pennsylvania, it was reported that “girls(?)” AND their mothers were shoving and punching each other in a melee at a Victoria’s Secret outlet. We can only imagine that this will inspire the next big late-nite cable TV reality show. New Jersey officials were heartened by the fact that their cultural ambassador – Snooki – was not involved. Retailers were “pleased” with the strong start to the holiday shopping season, According to the National Retail Federation. Total sales over the four days grew 16.4% and individual consumers spent an average of $398.62 up 9% from last year. Online sales were extremely strong for the entire period as well as Cyber Monday.

Black Friday is a notoriously poor indicator of sales for the entire holiday shopping season and some analysts are warning that this could be only a temporary bright spot rather than a true revival of the consumer economy. This gloomier interpretation says that short-lived deep discounts merely pulled forward from December sales and that price slashing is the only thing that can encourage cash-strapped consumers to spend and that they will shut their wallets again now that the deals have gone. My gut tells me that those human herds aren’t exactly the types that are able to adhere to a budget. I think they will be ready to stampede Pamplona style whenever retailers wave their red capes.

On the bright side, retail sales have risen for six months in a row. Even Wal-Mart broke a two year stretch of same-store sales declines by growing 1.9% in the third quarter but this came at the cost of lower margins. More deep discounts mean lower profit margins for retailers who will, of course, pass that on to their suppliers through auctions and price beat downs. That is reflective of what I continuously hear from senior toy executives: “higher sales but lower margins.” Also, retailers brought in very lean inventories and that could limit upside potential if holiday demand continues to be strong. The scramble is now on to get more goods out of domestic manufacturers and those with domestically warehoused product.

After a June/July slowdown, since early August the US economy has been improving slowly but at an increasing rate.The November unemployment rate fell from 9% to 8.6% while payroll growth accelerated to 120,000. The difficulty with the jobs report is that it is actually two reports: the unemployment rate is based on a survey of 60,000 households while the jobs number comes from a different survey that covers the payroll records of about 140,000 businesses. The payroll number is less volatile and widely viewed as the more reliable of the two. The sharp drop in the unemployment rate was partly due to a shrinking labor force which suggests that some unemployed people have become discouraged and stopped looking for work. Once they start searching for a job again the unemployment rate could tick higher. Meanwhile, payroll growth of 120,000 remains well below the level that most economists consider consistent with a strong economic recovery. In addition, payroll numbers were lifted last month (as they will be for the next two) by temporary holiday retail hiring. Taken together the jobs report does signal improvement but not as much as headlines suggest.

As the US economy continues to slowly improve, the European debt crisis is the joker in the deck. The euro is now close enough to going off the rails that Angela Merkel and other European “leaders(?)” are now less focused on provincial politics and finally closing in on a solution. The Cliff Notes version is that Merkel supports European Union treaty revisions which would force debtor nations to fix their financial problems. This is, of course, the long term solution but ignores the crisis that it upon them right NOW. The rest of Europe is looking for a “backstop” or lender of last resort to guarantee all debts. That would likely be either a European Central Bank declaration or the issuance of Eurobonds for which all EU members would be liable.

In either case, the weight would fall heavily on Germany’s shoulders because they have the strongest economy and have behaved in a fiscally responsible manner. Bailing out the basket cases of Southern Europe doesn’t play well in domestic German politics. Think of it like the displeasure that responsible US households would have at being told to pay higher taxes in order to bail out people who took a flyer and “bought” a house that they couldn’t possibly afford. True, many American households are in trouble because someone lost a job or got sick or are underwater due to the housing market meltdown. Everyone seems to be able to get their minds around that sort of thing. Germans see a completely different type of situation in the irresponsible behavior of the Greeks not paying their taxes and then retiring to the government dole at age 50.

The truth is that Europe is like America. It needs both a long term fix AND short term crisis relief. In Europe’s case the clock is ticking down to a matter of weeks and with their backs to the wall, they finally seem to be looking at a two-pronged approach. Once the ticking time bomb is taken from the room, US markets should stabilize and the economy should continue to move forward. That said, in the US it appears as is nobody is prepared to act like a grown up until after the upcoming election. Fortunately that is less than a year away.

In the toy industry, search starts have remained strong and some companies have actually been hiring while others continue to play “hurry up and wait” even after they have selected a candidates. I suspect that decent holiday sales numbers will lead toy companies to have an increased sense of stability spurring somewhat larger budgets. This should lead to continued strength in search starts and companies feeling more confident in actually completing a hire. Things are getting better faster but…

Muddling through,
Tom Keoughan

By ToyJobs|2020-11-20T08:51:01-06:00December 7th, 2011|ToyJobs Blog|Comments Off

From the Yuan Wars to Toy Company Jobs

As November’s very heated election approaches in a continuing climate of economic malaise, desperate politicians are pointing the finger of blame anywhere and everywhere but at themselves. The nation is rightly disgusted with its banksters but is growing immune to the long and continuous public bludgeonings of their ilk. In search of another scapegoat the thundering congressional herd lurches eastward – “Blame the Chinese! – after all they don’t vote in our elections.”

Chinese workers have been striking (or just not showing up) and demanding higher wages. Frankly, good for them – they were being paid a pittance and many had pretty lousy living conditions. I’m all for an increase in the purchasing power of Chinese factory workers. That said, a dramatic upward currency revision, as many in Washington are calling for, could have all sorts of unintended consequences.

China is NOT sucking up as many U.S. jobs as is touted by the pandering vote grubbers. Low end (toys, sneakers, small appliances, et al.) manufacturing left our shores long ago and is not coming back. You can’t make these goods in the U.S. and still meet “the Wal-Mart price”. Even in these dire economic times no one will accept a wage low enough to make widespread U.S. consumer goods production feasible. Well, except maybe in Detroit. “What about cars?” you ask. “Building cars isn’t low end manufacturing.” Yes, they are building cars in China but they are not shipping them here. Those cars are for Asian consumption. By the way, part of “they” is “us”. U.S. auto manufacturers are building cars in China for Asian consumption as well.

If the U.S. political class is able to harangue China into a significant upward revision of their currency, it will cost U.S. jobs. American companies who have their products manufactured in China will have higher costs, and because it is very difficult to budge retailer’s price points, will therefore have smaller margins. An environment of diminishing margins is not likely to spur additional hiring. Companies will not be looking for additional sales marketing or product development staff. This is especially true of smaller private companies where owners tend to view the cost of each additional employee as coming straight off the bottom line – which translates to straight out of their pockets. A rising yuan doesn’t support these small businesses which are supposed to be the engines of American job growth.

In taking a country from the 12^th century to the 22^nd in the span of a mere fifty years, China’s leaders have to deal with far bigger problems than the U.S. Congress. They are going to move slowly and do what they think is right for them – whether what they think is right, actually is right or not. Them, of course, being the Communist Party, which is committed to maintaining power whether the country is communist or not. What we will likely see is a few small gestures such as the past two weeks 1% rise in the yuan in an attempt to mollify the situation until after the U.S. elections (now only six weeks away) when everyone’s attention will be focused elsewhere.

One of the factors that is really holding up job growth in the U.S. is uncertainty. Business owners like predictability. They determine what profit margin they want in order to make an enterprise worthwhile. Then they try to project sales (always tricky) and try to set costs at a level that will give them that margin or better. Costs are supposed to be the easy side of the equation to figure out. Unfortunately, we are currently in a situation where no one knows what health care costs will be or what climate change legislation costs will be. No one even knows what the tax rate will be. The tide may turn either for or against the business community but once we know what the rules are we can decide what to do about them. Until we know the costs we can’t even do the calculations, therefore many things are being put on hold . . . like hiring.

In the current economic climate it’s time to scrap blindly chanting ideology and focus on the pragmatic. Just so you know where this is coming from – I consider myself socially liberal and fiscally conservative but most of all a pragmatist. “People can believe in whatever they want, I want to do what works.” I know, I just painted a huge target on my back and expect to be pelted from all sides by Nerf missiles when I arrive in Dallas for the Fall Toy Preview. In any case, what seems to be pragmatic in that it would help the economy and can also actually be passed and signed into law is to extend all Bush tax cuts for a period of two years and then review them two years on. This is not the time for a 700 billion tax increase. I think it’s likely that is what will happen. Obama doesn’t have the votes to do what he wants and everybody realizes it will be disastrous if taxes increase for everyone at the end of 2010.

Upcoming tax certainty isn’t the only positive as the economy continues to slowly (very slowly) improve. There are other “reasons to be cheerful”. Despite the hot summer doldrums, retail sales for July and August slowly but steadily increased, coming in ahead of expectations. August saw an acceleration in manufacturing in both the U.S. and China. Growth was slow but again it was positive. However, we should temper our enthusiasm on this particular metric. It is completely natural for production to ramp up in July and August as seasonal goods are manufactured for late August/September pre-holiday delivery to retailers. While sell in is good, the ultimate question is sell through.

Average hourly earnings – which decide how much money people have available to spend – were up by 0.3 percent. There was also a rise in temporary employment which is often a prelude to the creation of permanent jobs. A better than expected 67,000 private sector jobs were added in August and there were upward revisions to data for the previous two months. True, the government shed 114,000 temporary Census workers but that was expected.

The September stock market has been strong and most economists are de-emphasizing the chance of a double dip recession. Warren Buffett last week stated: “I am a huge bull on this country. We will not have a double-dip recession. I see our businesses coming back almost all across the board.” After all the gloom and doom of the summer it seems that we find ourselves in a situation where the economy is not collapsing but rather heading in the right direction though at too slow a pace to drive unemployment down.

The toy industry has several things going for it. Most toy companies have focused this year on producing low cost goods. While retail sales have been creeping upward, shoppers have been hesitant to purchase big-ticket items like autos, furniture, appliances. In fact, electronics retailers are revamping their aisles to focus on handheld gadgets to try to excite consumers who have grown weary of their traditional big-sellers: televisions and personal computers. After all, how many big-screen TV’s do you need? Handheld devices are still pricey compared to toys. The toy industry may find itself in the pricing sweet spot for the 2010 holiday season.

The growth of Toys’R’Us pop up stores is also exciting. Last year Wal-Mart only had to deal with the competitive impact of 90 somewhat hastily assembled Toys’R’Us Express locations. This year Toys’R’Us is planning 600 express stores with 300 of the locations already up and operating. More locations, more shelves to fill and more competition for a Wal-Mart whose toy department will be 25% smaller this year, are all positives for toy companies.

As for toy company jobs, the annual late August/September hiring bounce has been somewhat muted for a number of reasons. Retailers continue to order late in an attempt to shift as much liability as possible onto toy manufacturers. The trouble is that factories have been relocating inland and north. It takes longer to get goods to the coast, there has been a shortage of shipping containers and also massive traffic jams on roads leading to the ports. Later ordering combined with longer lead times is not a recipe for success. Over my three decades in the business, I have noticed that toy companies feel better about themselves and start hiring once their goods hit the retailer’s loading docks. Later shipping has caused many companies to delay pulling the trigger on hiring decisions. Also, all of the uncertainty over government rules, regulations and taxes has been a considerable factor. Make no mistake about it some companies have begun hiring and we have begun a number of searches, but there are also a lot of companies talking about their staffing needs but dragging their feet rather than getting going. Like the economy, things are moving in the right direction but slowly, slowly.

Still Muddling Thru,

Tom Keoughan

P.S. Wow, sorry about the long tirade. There must have been some “pent up demand”. I guess the main difference between me and the Washington gasbags is that I have not yet learned how to talk in bullet points. See y’all in Dallas.

By ToyJobs|2020-11-20T08:51:04-06:00September 22nd, 2010|ToyJobs Blog|Comments Off

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